The artificial intelligence trend has excited every stock related to artificial intelligence. There are incredible increases, especially in microchip manufacturers. So do they deserve these increases? Which one is expensive and which one is cheap? How should we look at it? I will talk about these issues today. I will compare Nvidia, AMD, Arm and SMCI. We will look at which of these is cheap and which is expensive, and we will see that one of them is extremely expensive in my opinion, and the other one is still quite reasonably priced. Additionally, stock pricing is an art rather than a science and is greatly affected by daily developments. When we look at it in this context, you definitely need to manage your risk and start investing in stocks where they are valuable in your opinion.

Let's first look at the price movements in stocks. The record is up 170% in SMCI stock since the beginning of the year. An incredible increase indeed. The increase in arm is 116% and the increase in arm actually comes from the last 3 days. Not even since Christmas. Nvidia remained reasonable compared to these, there is an increase of 49%. There is a 24% increase in AMD in this period. The increase in the ndx, which is the Nasdaq 100 index, is only around 8%, while the increase in the S&P 500 is around 6%. In other words, all 4 stocks we have have risen well above the market. But the rise of smca and arm is even more strange.

When we look at the last year, the numbers get even weirder. SMCI's rise in the last year is 753%. So if you put roughly $100000, you would have $753000 right now. It's not exactly like this, but I'm trying to simplify it. There is a 231% increase in Nvidia, 134% in Arm, and 106% in AMD. In the same period, Nasdaq 100 increased by 43% and S&P 500 increased by 21%. So no matter how you look at it, I can say that these stocks are actually driving the entire stock market. Especially since Nvidia is a large company, it has a direct impact on the indices. SMCI and Arm are smaller companies compared to him.

The main reason for the craze is that people believe that artificial intelligence is a revolutionary idea. I think so too, and investors think that the artificial intelligence craze will increase the demand for such companies, and they are not wrong. We are already seeing concrete growth, especially in Nvidia's balance sheet, and perhaps we are actually at the beginning of the madness.

Sam Altman, CEO of Open AI, left for a while but returned. The creator of Chat GPT also manages the team, and he says he's looking to invest $7 trillion. He is trying to create a company that will design and manufacture new microchips that will feed artificial intelligence. 7 trillion dollars is such a strange number that, if I am not mistaken, the value of the entire American stock market is currently around 46-47 trillion dollars. The total value of stocks around the world does not reach 100 trillion dollars. This guy just says he's after 7 trillion dollars as an investment. What will be the valuation of this company is a separate issue. So he's talking about creating a 60 to 70 trillion dollar company.

According to Sam Altman, current microchips and production capacity are not sufficient. We need to go above and beyond this. After this news broke last Friday, everything related to artificial intelligence, that is, even those who produce shelves for artificial intelligence data centers, went up in value. Of course, it is very difficult to know whether this figure is serious or not. But I take Sam Altman seriously. Sam Altman is an important investor, an important entrepreneur. He is someone who has known how to find money for years. There is no financial institution in the world that can find this money and finance it on its own.

States must definitely get behind this. States get behind this in order not to lose to their rivals in the artificial intelligence game. Because the one who creates truly artificial general intelligence, that is, an artificial intelligence that can think better than humans, will win the whole game and control of the world will pass to that country. At least that's my claim. On the one hand, this figure sounds like bullshit, but on the other hand, when you have Sam Altman behind it and look at the potential of artificial intelligence, it also seems realistic.

Now that we have no doubt about artificial intelligence, what about the valuations of companies? Artificial intelligence will take over the whole world. If you say you want to enter any company related to artificial intelligence, regardless of the price, no problem. But if you want to be a more responsible investor and love your money, it would be beneficial for you to listen to me a little more. Because when we look at the 4 very popular companies these days, the value of at least one of them has now reached inexplicably high levels.

Let's start with Nvidia. Because Nvidia is part of the Magnificent 7, that is, it is one of the top 7 companies in the world, and as of last week, it left behind Google and Amazon in valuation. Its new total value in just the last few months is more than Tesla's value. It is the third most valuable company in the world after Apple and Microsoft. In other words, rarely in history has the value of a company increased so quickly. I've experienced this before with Tesla. Now we see it from Nvidia.

As of Nvidia's latest figure, its total value has reached 1.78 trillion dollars. Many investors believe Nvidia can surpass Apple and Microsoft. Because they think Nvidia's microchips and the Koda ecosystem it runs on have a greater competitive advantage than Apple's and Microsoft's. That's why they say it has a long way to go. When we look at the Ratings summary, Seeking Alpha analysts say hold. Wall Street gives strong buy. When we look at it quantitatively, it seems to hold.

When we look at Nvidia's valuation, they gave it an F, meaning it is very expensive. There is really a lot of information on seekingapha.com. When we look at the price divided by earnings for the last 12 months, it is 83, and when we look at the future, price divided by earnings is 58. Is it expensive, but it is only 2.5 times the industry average. So it's not that scary. In particular, when we look to the future, price divided by earnings is somewhere around the industry average, only 120% above. Moreover, when we compare it with Nvidia's historical price-earnings ratios, it is not in such strange places.

Considering the company's recent incredible growth momentum, there is another indicator that interests me very much in growth companies. PEG GAAP means price divided by earnings divided by growth. When we take growth into account, Nvidia's valuation is 0.43. The industry average is well below even the industry average of 1.16. So now it would be wrong to say that Nvidia is a free company. But I can say that a company that grows at this speed and has this much monopoly power is not expensive, at least when compared to others.

PEG Non-GAAP forward 1.38 diluting the stock. Because the company has given stock options to its employees there too. 1.38 is still well below the sector there. It is well below the average for his years. On the other hand, an expensive stock in terms of price divided by cash flow is well above the industry average and is somewhere around its own average. If you look at price divided by sales, it is still well above the industry average. But remember, these are figures related to the past.

We need to look at Nvidia's future, and when we look at its future, I still do not see Nvidia as very expensive. As a matter of fact, when we look at Nvidia's price earnings ratio, it is actually decreasing. In other words, it has returned to its previous figures. At one point, it rose very quickly and then retreated. Because as the company's future income expectations increase and its earnings increase, if its price does not increase much, then the stock actually becomes cheaper. Of course, this is a very relative issue, by the way. The price-earnings ratio of 53 is a high number in every way. So, compared to other microchip companies, which have been high in the past, I would not say that Nvidia is too expensive at this level.

If the economy deteriorates in general or there is a deterioration in expectations regarding artificial intelligence, which is always possible, at least in the short term. Here's Nvidia's balance sheet coming next week, if I'm not mistaken. If there is a small bounce there, and by the way, there are some leading signs. Arista Network, one of Nvidia's suppliers, offered a slightly lower than expected growth expectation for the future. That's why, of course, risks are always possible. These huge growths may not always continue. Then we can go back to 53. The stock price could go down quite a bit from here. However, my expectation is obviously not within this framework. I think Nvidia will maintain its price earnings ratio of 40 - 50. In this context, I cannot say that I find the stock very expensive.

AMD, Nvidia's biggest rival, currently has a value of $277 billion. That's roughly one-seventh that of Nvidia. When we look at the valuation, it actually seems to be a little more advantageous than Nvidia. Nvidia had F, here we have D minus. Both Seeking Alpha and Wall Street analysts gave buy. Quantitatively, tutus emerges here as well. When we look at the detail of the valuation table, price divided by earnings is 64.87 as of the last 12 months. If you remember, Nvidia was around 58.

Price divided by earnings is 47.26 forward-looking, price divided by earnings is 324 according to the GAAP standard for the last 12 months. Here, we have a stock that is quite expensive, price divided by earnings is 85.77 forward-looking according to the GAAP standard, which means it is not cheap at all. There is also PEG Non-GAAP 1.10, which I attach great importance to. This is below the industry average, at roughly the same places as Nvidia.

When we look at the historical development of the company's price earnings, we see that it has actually become cheaper. At one point, it was 802, now it is 278. In the other table, it was around 320. There are some timing differences between them. So, it is not very expensive considering its past history. But when we look at absolute value, I find AMD a little more expensive than Nvidia, and I think Nvidia is stronger in terms of competitive advantage between Nvidia and AMD. But I don't think there are big differences between AMD and Nvidia in terms of valuation.

Now let's take a look at SMCI, which is breaking records in terms of valuation. The total value of this company as of now is $43.24 billion. In other words, it looks like a very small company compared to both Nvidia and AMD. Price to earnings forward 35.78 still seems cheap here compared to both. Both Seeking Alpha and Wall Street are giving buy. When we look at it quantitatively, it gives a strong buy. Despite these tremendous increases, its valuation is still at level D. So it seems close to AMD and cheaper than Nvidia.

When we look at growth divided by price earnings, it is still 0.95 according to the Non-GAAP standard. So if it is below 1, PEG is quite expensive in GAAP. It is expensive according to GAAP standard. The reason for the difference is that this is actually a startup-like company. It currently grants numerous stock options to its employees. It is thought that the value of the stock will dilute in the coming period due to these options. That's why he gets D Plus there. On the other hand, when we exclude that issue, it is 0.95 in Non GAAP standard. So, frankly, it doesn't seem very expensive at SMCI.

Again, when we look at the SMCI valuation, we see that the price is close to the general average of earnings. It got very high for a while. Then it came to a more reasonable place, 21.56. Of course, it is not cheap, but even though it is in the artificial intelligence game and its value increased by 700% in a year, it is still a company with a reasonable price. Frankly, I'm sorry I missed SMCI.

Frankly, I expect a correction in the market in the coming days. Other than that market correction, I still don't see super micro as very wrong at the moment. It's a company that's still on its way. It's a company with high growth expectations, I like it. But out of these three, I definitely like Nvidia the most. SMCI is my second favorite right now. My third favorite is AMD.

As you know, Arm Holdings has just gone public, and during this public offering period, I preferred to stay away from Arm Holding for now. It's not because I don't like the company. I like the company. The company is a very large and successful business, especially in the design of microchips used in mobile phones. But I don't like Softbank, the big owner of this company. Softbank is an organization that previously took WeWork to the public and frankly made investors miserable. Here, softbank currently owns 90% of the company and has not started selling its own shares yet. So right now actually only 10% of the company is traded.

As of last week, the company announced that there will be a net profit increase of around 150 - 160 million dollars next year, if I am not mistaken. Its value has increased by more than $75 billion. The reason for this is that there are very few stocks currently offered to the public, but this will change in March. The Lockup Period ends and Softbank gains the right to sell its shares to the market. From March 12th and only 10% of the stock will be in circulation at the moment, 100% will be in circulation. Of course, how many shares do they sell? Do they sell them all? How does this affect the price? It is impossible to know these. But here you should never forget the fact that there are very few stocks in the market behind this super speed of value increase. That's why ARM is, in my opinion, the riskiest investment among these four. Softbank owns 90% of ARM and has the right to start selling its notes in the coming days. After that, we need to see what the price is. But now let's leave this issue aside.

Let's look at what ARM's current valuation is. Armature currently has a value of $153 billion. This came from almost 60 - 70 billion dollars in 2 days. It gained nearly 60% in value. At one point it went up to 38%. Then it closed the day with a 30% gain in value. In other words, the company's value increased by 80% - 90% in 2 days. Now let's look at the valuation figures. We do not have price divided by earnings for the last 12 months. Because it has only been two quarters since Arm went public.

When we look at P/E Forward, it is 124. This is almost 2 to 2.5 times higher than all three companies we have examined so far, 368% above the market average. According to the P/E GAAP standard, when we look at the last two months, it is 1851. This is 6,414% above the industry average, well above all three companies we have reviewed so far. Price divided by earnings forward comes out to 686. This is again 2365% above the industry average. Price divided by cash flow, one of the indicators that I attach great importance to, is 169, the sector average is 21, and it is 702% above the sector average. PEG Non-GAAP (FWD), which I also attach great importance to, i.e. price divided by earnings divided by growth. The forward ratio is 3.03, the industry average is 2.08. Here too, it is 45.90% above the industry average. Arm is in this case.

So the numbers tell me Arm is overpriced. There is no growth in the mobile phone market, which is Arm's main focus. Today, a follower of mine on Twitter told me that Qualcomm, the largest microchip manufacturer, will no longer use Arm's designs. Frankly, I don't know how accurate the data is. For this reason, I find it too expensive for me to touch Arm. But the markets are in a crazy mood right now. It can go even higher. Because very few stocks are traded in the market and it is possible to push this stock even higher with speculative attacks. But I don't touch it. I wish I could have entered when it opened to the public. It went public at $51. Now you see where it's coming from. But I would view it as a speculative asset. I'll look at it that way from now on. I don't see anything here that would satisfy me from an investment standpoint.

When we go to the public offering information of Arm Holdings on Nasdaq, the data is actually extremely obvious here. There are around 1 billion 26 million 54000 Arm shares in total. Only 9550000 of them are currently seeing movement in the market. All price movement breaks here and the locking period ends on March 12. Softbank will start marketing and selling company shares. What happens to the price after that is something that scares me, but I could be wrong. Being wrong or being right is already part of this job, but I don't want to deliberately score this goal on myself, and then I might feel sad.

Yes, this is my opinion. If the artificial intelligence craze continues in the coming days, I think it will spread from microchip companies to other areas.

The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.